07 February 2011

Goldman's Regulating Reputational Information

Internet law blogger extraordinaire Eric Goldman's book chapter on regulating reputational information is now available at SSRN. Per the abstract:

This essay considers the role of reputational information in our marketplace. It explains how well-functioning marketplaces depend on the vibrant flow of accurate reputational information, and how misdirected regulation of reputational information could harm marketplace mechanisms. It then explores some challenges created by the existing regulation of reputational information and identifies some regulatory options for the future.

I particularly like his operational definition of "reputational information," as:

[I]nformation about an actor’s past performance that helps
predict the actor’s future ability to perform or to satisfy the
decision-maker’s preferences.

and his notion of “reputation systems” that aggregate and disseminate reputational information to consumers of that information, as a discrete concept.

He notes that immunity from liability and the reputation of reputation systems themselves may be more effective than government regulation of reputational information, but identifies emerging concerns such as "ex ante consumer gag orders" in contracts with vendors and service providers, which may deserve scrutiny under void as against public policy doctrines or may require statutory regulation.

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